Conventional credit card transaction processing systems comprise a network of merchants connected via a plurality of telecommunications links to financial institutions. VISA®, MASTERCARD®, and DISCOVER® are typical credit card networks that allow local and national banks to issue credit cards under a single authorization system in a standardized fashion. A typical transaction system 10 is schematically depicted in FIG. 1. At a point of sale terminal 12, a merchant or customer inserts a customer's credit card 14 and enters the amount of a purchase, which is the financial transaction. Transaction information 16 is sent via a plurality of telecommunications links and computer networks through a credit card network 18 to the credit card issuer's processor 20. The credit card issuer's processor 20 is associated with a credit card issuing bank 22, which maintains the customer's account. The card issuer's processor 20 analyzes the transaction information 16 and sends an authorization signal 24, approving, rejecting, or referring the transaction, back through the credit card network 18 to the merchant. The entire process must be performed in a matter of seconds to provide a real time authorization process for customers and merchants.
Today, the use of credit cards has become the predominate method of payment for goods and services. Credit cards offer customers a wide array of advantages over traditional methods of payment, such as allowing customers to avoid the risks associated with carrying large quantities of cash, and allowing customers to make large purchases and pay for them over a period of time. Real-time authorization and standardization of credit card networks, such as VISA® and MASTERCARD®, have led to widespread acceptance by the majority of merchants.
Merchants are competing more vigorously than ever before to cultivate new customers and predict current customers' needs. Due to the myriad of advertisements that a customer may face daily, merchants have become more selective in their advertising and promotional efforts. Merchants often target customers using specific marketing promotions based on a customer's past purchasing profile. In addition, credit card issuers have developed business relationships with merchants that provide customers with incentives, such as airline frequent flyer miles. Frequent flyer miles are reward points that a customer accumulates by making purchases with specific merchants. Accumulated points may then be used towards the purchase of plane tickets, hotel accommodations, automobile rentals, and upgrades. This relationship provides the customer with an incentive to use both a given bank's credit card and the goods or services of the participating merchant.
Conventional credit card systems have a limited ability to segregate balances within a single customer account, such as separating cash advances from merchant transactions. These conventional systems are not flexible enough to accommodate separating merchant transactions further into additional balances depending on the specific transaction. As a result, incentives that a card issuer, merchant, or other interested party may apply to a given transaction are limited.